By December of 1944, the German war machine was in a very perilous situation. Allies had invaded Normandy in June of 1944, and since then had been driving relentlessly through Axis-occupied France and Italy while the Soviets had driven back German advances and entered into eastern Axis territories.
Hitler's idea for a surprise counterattack against the US and British was not for an overwhelming victory, but mainly to try and broker a separate peace treaty independent of the Soviets. If a peace could be settled against the US and Britain, it would also free up large amounts of men and materials that could be put to use on the Eastern Front. The plan of German attack would be a blitzkrieg attack through the Ardennes Mountains to attempt to separate British and American forces and capture the city of Antwerp.
The initial German assault on December 16, 1944 was fairly successful, catching most of the Allies off guard at the speed and size of the offensive. The weather during the attack was also favorable to the Germans, since the low overcast and fog prevented Allied air support from assisting the defenders. Although initially successful, tenacious defense along the thinly-defended line slowed the German advance enough for reinforcements to arrive and push back the attack.
Although it came relatively close to success, the Battle of the Bulge ended up costing the Germans a large amount of men and material - neither of which could be replaced by Germany at this stage of the war.
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